Intel Corp. (INTC), which reported its earnings yesterday, gave investors an unwelcome surprise as well when it announced its first 14 nm chip, codenamed Broadwell, is being delayed by a quarter.

I. A Minor Slip

Intel was supposed to start shipping Broadwell chips to OEMs in Q4 2013 (this quarter) giving them time to integrate the chip into their new notebooks, laptops, desktops, and tablets. Instead the new chips will start shipping in Q1 2014.

Currently, Intel's premium Core Series-branded Haswell chips are produced on a 22 nm process. But moving from 22 nm node to 14 nm has proved trickier than Intel expected.

[Image Source: Jason Mick/DailyTech LLC]

Normally a die shrink involves years of prototyping technologies. When a production process is mature enough to come out the laboratory, it's installed at the fab. Equipment must often be updated or replaced to handle the new process once it's moved to a full-scale fab on its final path towards production. At that point tests runs are executed to study the efficacy of the fab hardware and methodology for the node, typically at lower volumes that the final production runs.

It is typical to find problems with the process at that stage, and it is up to the engineers to institute a set of process method and hardware changes to minimize those defects. When the fixes are in place, a semiconductor manufacturer crosses its fingers, metaphorically speaking and moves to volume production.

Intel currently owns 95 percent of the server market (Haswell is pictured).

This approach typically works out for Intel, but this time something went wrong. The fix failed to minimize the number of wafer defects to the extent expect, and as a result a relatively high percentage of Intel's CPU were turning out dead on arrival.

Intel's new CEO Brian Krzanich insists this is not uncommon stating, "We have confidence the problem is fixed because we have data it is fixed. This happens sometimes in development phases like this. That's why we moved it a quarter. We have a strong desire to get Broadwell to market. If I could, there'd be nothing slowing me down. This is a small blip in the schedule, and we'll continue on from here."

In Intel's internal jargon, Broadwell is a so-called "tick" release, which involves simply shrinking the previous processor architecture (Haswell, in this case), while possibly adopting some minor tweaks/improvements based on lessons learned. By contrast, the next generation after Broadwell will be a new architecture, called a "tock". That "tock" release -- Skylake – will not be delayed, Mr. Krzanich stated, from its prospective 2015 ship date.

II. Intel Enjoys Healthy Process Lead, but Its Chips are Slower than Samsung's

The delay of Broadwell is a bit of bad news, but it could be much worse; the earnings report for Intel was otherwise better than expected. And while Intel has yet to establish a strong presence in the smartphone and tablet markets (unlike the server and traditional PC markets that it dominates), it is starting to attract interest in the mobile space, thanks in part to its process lead and the intrinsic power savings that lead provides.

Despite the setback, that lead remains relatively large. International Business Machines, Inc. (IBM) in August soft launched 22 nm Power8 architecture high-end server chips and licensable architecture. However, it's still working with partners to try to bring that chip to the market in physical form. Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) 28 nm process -- a top third party manufacturer for ARM chips (the mobile industry's dominant architecture), has taped out 16 nm chips. It's attempting to jump directly from 28 nm to 16 nm.

16 nm is still a larger node than 14 nm, but TSMC didn't seem to have the same problems with its die shrink, opening the floodgates to production with the release of design flows for common chip types (including various ARM CPUs) last month.

Samsung's process is 28nm LP (Gate-First high-κ metal gate (HKMG)), while Intel's 22 nm process is Gate-Last HMKG. This is a huge win for Samsung as it means that it's producing a better chip on a cheaper mature process -- the best possible scenario. By contrast, Intel's still fresh 22 nm is not only slower -- it also costs Intel more to produce.

In other words, don't bet against Intel's ARM rivals, even if they're a bit behind on process technology.

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